South32 begins sale of South African thermal coal operations

Australia-based miner South32 has reportedly started the divestment process for its South African thermal coal operations.

Australia-based miner South32 has reportedly started the divestment process for its South African thermal coal operations.

Unnamed sources were cited by Bloomberg as saying that Exxaro Resources and Seriti Resources have shown interest in bidding for South32’s South African thermal coal operations, which have been valued at around $800m.

“The company would hold negotiations with potential buyers over the next five weeks.”

In addition, MTN Group chairman Phuthuma Nhleko’s Phembani Group is considering bidding for South32’s South Africa Energy Coal (SAEC) unit, the publication reported.

South32 chief executive Graham Kerr has reportedly told The Financial Times that the company would hold negotiations with potential buyers over the next five weeks.

The company is assisted by Macquarie Group in the sale process.

In April this year, SAEC became a standalone business to allow the group to simplify the management of its global portfolio.

SAEC comprises four coal mining operations, Khutala Colliery, Klipspruit Colliery, Middelburg Colliery and the Wolvekrans Colliery, as well as three processing plants.

South32 owns a 92% interest in the unit, while a black economic empowerment group led by Phembani Holdings owns the remaining 8%.

The South African Government has been focusing on overhauling the ownership of mines in the country to reverse decades of exclusion of black population.

In June this year, the government released a new charter that requires permit-holding mining companies to raise black ownership from 26% to 30% within five years after a previous version was panned by the industry as a threat to investment in the country.

SAEC produces thermal coal for domestic electricity generation, as well as for the export market.